Six Flags considers bankruptcy

Photo by Don Treeger/The Republican Peter Ledwith, a mechanic at Six Flags New England in Agawam, works on the cars for the Superman: Ride of Steel roller coaster last week.

By JIM KINNEY
Business writer

AGAWAM - The owner of Six Flags New England won't be able to pay a debt when it comes due in August, but the company promises that visitors and employees here won't feel the impact.

"Six Flags New England won't be affected whatsoever," Mark S. Shapiro, president and chief executive officer, said Monday in a telephone interview. "The parks stand on their own. It's a highly profitable park. This is a back of house, corporate parent issue."

Six Flags New England plays host to an estimated 2 million visitors each summer, paid $2.2 million in property taxes to Agawam in 2008. Mayor Susan R. Dawson said Six Flags accounts for 5.24 percent of Agawam's total tax levy.

Six Flags has a temporary summer staff of more than 3,000 people.

Earlier Monday, Shapiro told investors in a conference call that his company's biggest debt holder refuses to meet with the company on restructuring.

Six Flags has hired consultants for a possible filing under Chapter 11 of the bankruptcy code.

A Chapter 11 filing would give Six Flags shelter from creditors' lawsuits. It would allow the company to keep operating as it restructures.

"We inherited a lot of debt. In this business environment it is unsustainable," he said.

The New York Times has reported that Six Flags has more than $2 billion in debt. On Aug. 15 it must redeem more than $300 million in Preferred Equity Redeemable Shares, known as PIERS in financial parlance.

Shapiro said the company can't sell unused real-estate now to pay the debt because the land market is so depressed.

Six Flags doesn't release attendance figures for individual parks, but estimates by outsiders peg the number at about 2 million visitors a year in Agawam, said Allan W. Blair, president and chief executive officer of the Western Massachusetts Economic Development Council. That makes either Six Flags or the Yankee Candle flagship store in South Deerfield the region's biggest tourist attraction.

"From what we can tell the Six Flags New England operation is doing very well," he said. "Taken by itself, it is profitable by all indications."

Those visitors also spend money on meals, motel rooms, gasoline and sundries outside the park, Blair said. The park itself buys food and other supplies from local vendors and employees spend their money locally, Blair said.

Six Flags reported a loss for the year of $134.9 million compared with a loss of $275.1 million in 2007. But, total revenues increased $50.5 million in 2008, or 5 percent, to $1.02 billion from $970.8 million in the prior year, according to the company.

Attendance for the year at all 20 Six Flags parks was 25.3 million, an increase of 400,000, or about 2 percent, above 24.9 million in 2007, also according to Six Flags.

Shapiro said the company had its best attendance year ever.

"There is a lot of uncertainly this summer," he said. "I think the focus needs to be on providing value."

This year, admission price with a Coca-Cola can will be $31, same as last year. Shapiro said the cost of concessions are either staying the same or going down this year. In the cases where the price will stay the same, Six Flags hopes to increase value in other ways. He even promised more french fries on the plate.

He said Six Flags will add staff, but he wouldn't say how many. Operating expenses will be up 3 percent over last year.

Six Flags still plans to reopen a renovated Superman: Ride of Steel roller coaster over Memorial Day weekend.